Answered Essay: Determining the Correct Inventory Balance [LO 7-1, 7-2, 7-4]

Determining the Correct Inventory Balance [LO 7-1, 7-2, 7-4]

Seemore Lens Company (SLC) sells contact lenses FOB destination. For the year ended December 31, the company reported Inventory of $70,000 and Cost of Goods Sold of $420,000.
a. Included in Inventory (and Accounts Payable) are $10,000 of lenses held on consignment.
b. Included in the Inventory balance are $5,000 of office supplies held in SLC’s warehouse.
c. Excluded from the Inventory balance are $8,000 of lenses in the warehouse, ready to send to customers on January 1. SLC reported these lenses as sold on December 31, at a price of $15,000.
d. Included in the Inventory balance are $3,000 of lenses that were damaged in December and will be scrapped in January, with no recoverable value.
Required:
Prepare the table showing the balances presently reported for Inventory and Cost of Goods Sold, and then displaying the adjustment(s) needed to correctly account for each of items (a)-(d), and finally determining the appropriate Inventory and Cost of Goods Sold balances. (Enter any decreases to account balances with a minus sign.)

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